The positive finish of world stock markets last week put a lid on the USD again because of inflationary fears first becoming real in the U.S. This inverse correlation with the stock markets has lasted for half a year now. But note that all the recovery moves in the equity market are ignited by better earnings news from the financial industry, not by consumer or industrial sectors. That the banks now have better earnings is no wonder, financing themselves at near zero and charging their customers six or more times that for credit. That is certainly not the reason for the state help for the economy, and we do not expect a thing like this to last for long.

In today’s trading, we expect the USD to gain territory against the majors, although in low volatility. Note the U.S. leading indicators for June, at 16:00 CET. This week will be relatively empty of other important economic data, except that the Fed’s head Bernanke will speak tomorrow and Wednesday.

by George Clement

Intraday Market Outlook for Day Traders

EUR / USD
In heavily overbought condition, the euro is currently trading at 1.4220, near stiff resistance this European morning. We expect downturns from these levels in today’s trading hours, leading to marks around 1.4050.

GBP / USD
The pound started strongly into the new week, now trading at 1.6505 and trying to attack the 1.6550 resistance line. We do not see this line being broken today, and rather expext downmoves from that line to the 1.6350 support zone.

USD / CHF
Trading in low volatility on solid support this European morning, the dollar is currently priced at 1.0675. We see that support zone to holding in today’s hours, giving room for a recovery up to 1.0820.

USD / JPY
After a stronger Asian session of the dollar against the yen, the European morning brought some downward correction, with the market right now at 94.50. We expect more of this downward movement today, to levels around 93.90.